Mistakes To Avoid While Taking A Loan Against Property
If you are planning to get a loan against property, apart from the things you need to know, there are also things you have to avoid, especially that one wrong move can foreclose the property you used as collateral in getting the loan.
Just to help you, here are the usual mistakes you need to avoid while taking a loan against property:
Not Comparing Interest Rates
You must avoid rushing and ending up ignoring interest rates. You have to remember that the interest rate of one institution is different from the others. Some may offer lower interest rates while some ask for higher interest charges, and obviously, you have to spot the one that offers the lowest interest rate to enjoy lower monthly payments and total loan amount.
Missing Out on Processing Fees and Prepayment Charges
One of the things that people usually forget is to check on the processing fees and prepayment charges. You need to remember that you have to pay these processing fees and also, you have to look at the prepayment charges and assess whether you can pay them or not.
You may also want to compare the charges of one financial institution to another, especially since their charges are not the same.
Not Opting for the Right Tenure
You have to make sure that you check on the loan’s tenure and only agree if you think you are capable of paying the loan until it matures. You have to put in mind that not because it is longer, it is better. Actually, the shorter the loan, the better, and the more you can avoid foreclosure.
Needless to say, the shorter the tenure, the larger the monthly amortization but this also means the lower the interest rate you have to pay. You have to decide according to your capabilities, nothing else.
Giving the Disbursal Time a Miss
You have to remember that there is a disbursal time you need to look at in the loan application process. Some banks may disburse the money 72 hours after the approval and completed paperwork.
You may also want to know how the financial institution disburses the loan. Will they give the entire loan amount in one go or will they give it in staggered terms? You must not assume that it will be given in one blow, you need to ask to know.
Not Factoring in Other Liabilities
Not because you are approved for a home loan, you will grab it right away, remember, your home is at stake if you miss making a payment. Apart from your home loan, do you have other financial liabilities? You need to factor in all your expenses before deciding on getting a loan.
Neglecting the Terms and Conditions
Some borrowers assume that the terms and conditions of financial institutions are the same, unfortunately, it is not the case. You have to read your contract, including the fine print before affixing your signature. Once you sign a contract, you have no choice but to abide by it whether or not you agree with what it states.